Connected TV Doesn’t Offer the Best of Both Worlds Yet

Ad tech's bad actors reemerge from the woodwork as demand for programmatic TV outstrips supply

The industry's arbitrage players and fraudsters have yet to be locked out.
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Advanced television, in the form of CTV and OTT inventory, is said to combine the best elements of traditional TV (in terms of quality media content) along with the relevance of digital (in terms of hyper targeting).

The net result is a near-utopia for the media industry, with media buyers willing to pay higher inventory prices to be better placed beside premium content, while media spend returns to the industry’s trusted content providers.

The CTV sales pitch

Well, that’s the sales pitch, at least. And it’s one that was frequently reiterated at this year’s upfronts, the traditional week-long TV industry dog-and-pony show that’s beginning to resemble the NewFronts, the digital glitz-and-glamour parade designed to bring legitimacy to digital publications. Buyers at this year’s upfronts, though, noted a distinct lack of details.

Pitches like this one are also commonly employed by ad-tech vendors eager to capitalize on a fast-changing industry, as well as those keen to differentiate themselves from the densely populated programmatic landscape that many investors find increasingly undifferentiated.

For example, eMarketer notes how CTV and OTT demand would drive programmatic spend to the extent it would account for almost half of all U.S. video ad spend in 2021, topping $20 billion.

“The near 50-50 split of spending is an indicator of how eager buyers and sellers have become to capitalize on video advertising in any and all forms,” said Lauren Fisher, principal analyst at eMarketer, in a recent report.

The early CTV gold-rush is laden with complications

However, what’s also clear is that some of the more nefarious elements of ad tech are also making coin while this sector of the industry develops, and as demand for automated, data-driven TV ad placements has already outstripped supply.

For instance, the comparatively slow adoption of transparency initiatives adapted from the desktop space, such as Ads.txt, means the perpetrators of fraudulent tactics like arbitrage are free to recreate the Wild West days of programmatic by taking the lion’s share of revenue originally intended for working media.

And, ironically, server-side ad insertion (SSAI), a technical advancement designed to improve the public’s ad viewing experience on advanced TV, has inadvertently let them cover their tracks.

Simply put, this is a case of the worst of digital enjoying the best of TV: the higher inventory prices associated with CTV and OTT media buys.

But all is not lost.

Following the money

Separate sources noted how they have observed the bad actors of programmatic buying now playing their trade in the advanced TV space. One especially prevalent practice is domain spoofing, which is when ad-tech middlemen misrepresent the ad inventory they have to sell and/or engage in wild price speculation.

Ad verification outfit Pixalate estimates that as much as 500,000 of the internet’s top domains have implemented the transparency scheme Ads.txt as of mid-2018. But where Ads.txt was effective in pushing a considerable number of ad-tech bad actors to the far reaches of the desktop ecosystem, experts are witnessing their return via CTV and OTV.

“The bad actors have pivoted to environments that were a little easier to manipulate … I think there’s a few things that make it the perfect storm for them to thrive,” explained Nick Frizzell, vp brand safety and inventory operations at SpotX, as SSP.

However, as money now moves into the CTV and OTT space, so too do the bad actors. And the slow adoption of App-ads.txt—a version of the same scheme aimed at helping to combat fraud in mobile and OTT apps—has helped ease their transition.

By contrast, a widespread adoption of App-ads.txt would require store providers themselves to provide software functions that would then let app developers construct an App-ads.txt file that could list their approved ad-tech partners.

“We haven’t seen any stores do that, so right now it’s hard to tell from an external buyer perspective who’s authorized to sell a given CTV/OTT app,” said Frizzell.

According to Frizzell, this “opens the floodgates” for bad actors, many of whom employ a myriad of tricks to falsely represent premium app inventory in this fast-emerging and highly lucrative space.

Fraudsters use bogus apps to create ‘demand’

One of the bad actors’ tricks is to upload apps to app stores that have a low entry threshold. They then use those “bogus apps” to begin selling ad inventory—or, more accurately, fake traffic.

“Frequently, these apps don’t have real content, and they have some stuff that they’ve scraped online somewhere and that they can run ads against … that’s borderline fraud,” explained Roy Rosenfeld, DoubleVerify country manager, Israel.

In certain circumstances, once these bad actors have accounts on an app store, it gives them demand for CTV traffic. This then makes it easier for them to gain seats on an ad exchange where high volumes of traffic can make malfeasance harder to detect. “Once they have a seat on an exchange or ad network where they’re selling inventory, they can begin to create more of it—almost out of thin air,” said Rosenfeld.

A tool to improve the viewer experience makes it worse

Elsewhere, the development of ad verification software is likewise trailing demand for CTV inventory. Companies are still unable to identify fraud at the same rate, or accuracy, as they can on desktop and mobile web.

In particular, this sector of the industry has to wrestle with the presence of server-side ad insertion. SSAI inadvertently makes fraud detection in these environments more difficult by creating a proxy layer between ad delivery and verification providers whose job it is to detect fraudulent behavior.

“We trust the proxy to represent users in general, but there’s no real way to validate it through SSPs,” explained Angelos Lazaris, chief data scientist at Pixalate. “So, when someone goes through a proxy and says, ‘Here’s my ID, I’m [an approved reseller], but I’m also representing these 10 users that have their own user ID information,’ all of this information can be spoofed.”

Therefore, in the case of invalid SSAI, the proxy will request verification, and nefarious actors can send spoofed identifiers to evade detection by verification vendors.

Additionally, according to Tal Chalozin, CTO of advanced TV buying specialist Innovid, there is little to no non-human traffic in the CTV space. Instead, it is a case of mobile in-app traffic disguised as such traffic.

“So, it’s not a case of traffic on Roku that’s being faked, it’s a case of a user-agent being spoofed,” he said. “And then you have people writing that this is an impression that is coming from CTV on an open RTB [bid] request that puts it on the exchange for a high price.”

How the industry is moving to shut the bad guys out again

Needless to say, the industry is not lying idle while the fraudsters replenish their coffers. Several industry efforts are being made to further supply chain transparency in the CTV sector, in addition to App-ads.txt.

Most notably, these include Sellers.json and OpenRTB SupplyChain by the IAB Tech Lab. The trade organization is in the process of reviewing the input on both supply chain specs after a public comment that concluded last month.

Sellers.json aims to let buyers verify the entities who are either direct sellers of, or intermediaries in, the selected digital advertising opportunity for purchase. The industry hopes this development will help dampen the efforts of arbitrage players.

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